Dubai sovereign debt crises

Dubai sovereign debt crises
As a hot tourist city, Dubai attracts not only the ordinary people, it
also attracts like Brad Pitt, David Beckham and other celebrity to buy a
house Land. However, the financial crisis is coming, make faded aura of
the desert paradise.
Local Time this week, the Government of Dubai to make a shock decision to
global investors, announced a reorganization of its sovereignty over the
investment company of Dubai World, and apply for suspension of the
government holding company Dubai World Group, part of the foreign debt
repayment, until May 30, 2010.
Moody's and Standard &amp; Poor's immediately dropped significantly large
number of Dubai government-related debt rating agencies, making them lose
their &quot;investment grade&quot; rating, some of them down to junk
level.
Dubai announced by the Ministry of Finance 26, issue bonds, two from the
Abu Dhabi government-owned bank to raise 5.0 billion, liabilities of 59
billion U.S. dollars, but the Dubai World has not benefited, the Ministry
of Finance asked its creditors to allow &quot;pause&quot; debt, at least
extended to May 30 next year.
According to Hong Kong media reports, once the insolvency of Dubai World,
will become the default in Argentina since 2001, the world's largest
sovereign fund an event of default. Fears could trigger a new round of
financial turmoil.
Credit Suisse analyst team, said the European banking industry and the
United Arab Emirates company Dubai sovereign investment agencies: Dubai
World (Dubai World) the risks associated with exposure to about 400
billion U.S. dollars. Previously, a number of European banks to
participate, and arranged with the city in the Middle East countries, the
number of bonds and lending activities. Credit Suisse pointed out that
since 2005 has been determined that Dubai World had issued bonds worth 10
billion U.S. dollars, also paid 260 million syndicated loan.
Credit Suisse to clients in a research note, the Middle East in the
European banking industry's exposure can not exceed 1% -2 percentage%,
while the Dubai public accounts for only a small part. But Credit Suisse
also pointed out that if 50% of the exposure into actual losses, a
provision of the European banking industry in 2010 will increase by about
5%.
A Barclays spokeswoman said Barclays risks associated with exposure to
Dubai World, &quot;not high&quot;, the company is closely monitoring this
issue on the broader financial markets.
ING spokesman said the company and Dubai World Bond-related exposure is
negligible. He also said the company involved in loan transactions in
Dubai some of the world, but there is no reason to modify the formula for
expected loan losses announced earlier.
Standard Chartered Bank, wrote in a statement, the company would not
comment on specific client matters, &quot;we are fully aware of our
disclosure obligations, if we should be informed of any disclosure of
information we will issue a statement.&quot;
Dubai's sovereign credit as investors worried about defaults led to
global financial markets hit, Asian and European stock markets Pudie,
while government bond prices. Thursday's European equities trading,
shares of major banks in Europe and the decline in heavy Pudie, one of
the big losers for the closing down 7.1%, ING, and weight or 8.6% of the
Soviet imperial bank; European Dow Jones Stoxx 600 Index fell 2.2%,
biggest decline in nearly two months; the Asia-Pacific markets mostly
lower, banking stocks continued to be troubled financial worries, and
appreciation of the yen to 14-year high against the Japanese unit is.
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Financial crisis, due to various factors, in the Gulf region affected is
relatively small. As the regional financial center, Dubai has become a
major global financial &quot;safe haven&quot; and its various types of
large-scale investment projects were sought after, &quot;Burj
Dubai&quot;, &quot;Palm Island&quot; and other notable world-class
projects.
However, the Dubai authorities recently announced that to promote the
restructuring of its sovereign investment entities in the Dubai World
will seek to suspend the payment of creditors and the relevant part of
the debt agreement. Dubai World is Dubai the leader in all major
projects. In Dubai the world's official website, it claimed &quot;the sun
never sets&quot; enterprises, all kinds of assets distributed in about
100 cities worldwide, areas including port operations management, real
estate project development, hotel and tourism, retail and other private
equity and the line the industry.
However, the data indicate that the current size of Dubai World, the
total debt reached 59 billion U.S. dollars. In Dubai the world's
businesses, the famous &quot;Palm Island&quot; integrated project
developer Nasir company has 3.52 billion U.S. dollars of debt will be due
in mid-December.
Affected by this, Dubai's sovereign credit risk increased significantly.
Market data, Dubai's sovereign credit default swaps (CDS) prices rose 90
basis points, rising 530 points. Other countries in the Gulf region while
the debt risk premium has gone up significantly.
Major international rating agencies Standard &amp; Poor's to provide
information to the Xinhua News Agency, the Dubai authorities to four
related entities, credit rating downgrades and credit watch list with
negative implications. S &amp; P said the rating adjustment was mainly
due to the Dubai World company and its subsidiaries announced debt
restructuring. According to Standard &amp; Poor's criteria, the above
reorganization can be seen as breach of contract, that Dubai authorities
failed to provide timely and relevant entities to their core financial
support. In addition, another international rating agency Moody's
Investors Service also conducted a similar downgrade.
MATRIX group of large institutional investors in London related to
business executives ÅµÍß¶ûÂå·ò Freitas said: &quot;Most investors do not
like to see is such a thing happened. The worst is reluctance in the case
of creditors, (Dubai) on Nasir company's debt restructuring. This has led
to major companies in the region support the authorities had doubts about
the attitude. &quot;